>> MODERATOR: My job was the letter of the law says that you have to monitor every transaction for source of funds. So you actually can't, when a Bitcoin payment hits your count, there is no way of stopping that payment from hitting your account. The moment something hits your account, you might have opened up an account for a customer. You might have received funds, normally you would know which operator is coming from, it might be from a random Bitcoin address. You really just, by the ‑‑ just by virtue of using the Bitcoin network, you're running afoul of certain financial regulations, so there have been a lot of attempts to figure out how to deal with this. And they're not perfect. So if you require every single operator, for example, to collect identifying information, then you're collecting identifying information that can apply to transactions that are visible to many people.
So this is kind of where you have the need to monitor the networks, because this is a really paradigm shifting system, it's not apples to apples. It's apples to oranges. You're exacerbating huge central authority to collect this information.
>> Bitcoin is quite a technology in terms of financial institution, but the Blockchains is much more than Bitcoin. What is beyond? What is after Bitcoin? What can you do with the Blockchain in addition to just financial transaction of payment systems?
>> I guess on these points there are lots of initiatives going on right now, I do believe the most disruptive, considering many of us already know the Bitcoin, try to understand a generalization of the Blockchain technology that works beyond Bitcoin. Just like I was explaining to you, Bitcoin works a bit like this way: Not all, but a large part of the users who are part of the network, they have this database with all the transactions ever made in Bitcoin. So try to understand it a little bit just like the database being uploaded ‑‑ try to understand it as a database containing all the transactions between all the users. If I say some Bitcoin, I'm going to upload ‑‑ the network is going to upload the new version of this database saying that, okay, I have to ‑‑ I have to ‑‑
>> How can you use this beyond financial application, those transactions?
>> MODERATOR: Everything I have to do, of course, it's very complex in technical terms, but if you put information ‑‑ different information just like programs on databases like this, it's going to be much different. All the data in this Blockchain database is running on the Blockchain of Bitcoin. They are entirely built to represent financial transactions. So they are numbers. I'm sending one to pima Vera, pima Vera is sending ten. Instead of Bitcoin, which was built this way, we built a whole new system with a whole brand new Blockchain, I mean the database, on which we can write whatever ‑‑ it's different.
>> What do you write on top of the database?
>> Right now a lot of questions, common question that I get is Bitcoin, you know, it's the only Blockchain out there. So you have to explain that Bitcoin is the first Blockchain. The first instance of this new technology and there are many, many other block chains out there experimenting with different uses. So the fact that we call these tokens, in essence, that are passing on this decentralize the network, the fact we assign a money value to you doesn't necessarily mean that's the only use case. They are essentially tokens that can represent anything. The tokens that we're passing on the decentralize the network. It can meet a vote, membership, more complicated financial transaction than just a figure. So with these ‑‑ because this is ‑‑ because you can both transparent and secure and decentralized, you can build all sorts of business and social logic with these tokens and the way they interact. You can say if X happens, then funds are released. If milestones are met, or if a corporation takes this kind of action, automatically there could be a corporate vote. You could do all sorts of really cool business logic sorts of things on a transparent basis without needing one central person.
>> MODERATOR: I guess the most interesting idea being worked right now with the Block chain technology is the idea of smart contracts. The people with the Bitcoin community came up with the idea. So, for example, you have to ‑‑ you need access to the private key of a specific Bitcoin account to remove these funds. The first very simple way of smart contract on top of the Bitcoin Blockchain was created what we call wallet. I can create the specific Bitcoin address on which the funds can only be moved when three ‑‑ two out of this group of three sign the transaction. So it's very, very beginning of this smart contract technology. Right now we can use it by many, many other things. Bitcoin and other tokens running behind a Blockchain cannot be only understood as programmable money, but programmable tokens that can interact with each other in the form of smart contracts.
>> PRIMAVERA DE FILLIPPI: Perhaps we can show an example of what we can do with those tokens, which is actually not actually connected with financial transaction or payment system. So Bitcoin being the first Blockchain, the second Blockchain or the second application of Blockchain technology was actually name coin, reply indicates the exact same mechanism as Bitcoin, instead of being used in order to ensure trustless transaction of monitoring of currency, name coin was actually designed to manage in a decentralize the manner the transfer of domain name. So essentially it is actually up and coming today. It is just not being used by many people, but anyone that connects to the name coin network can actually purchase that bit domains and there is actually no need for any kind of organization such as ICANN, which is traditionally decentralized international entity that is required to ensure there is no two people that are registering the same domain name. By using the Blockchain technology, it is actually possible to use a decentralized technology to achieve exactly the same result.
Now, name coin is actually quite a simple technology. It's really just a small little tweak to the Bitcoin Blockchain. But because of all the Blockchain 2.30 technologies, then it is now possible to actually create much more sophisticated application, which are always going to this concept. So Bitcoin has shown that it is now possible to intermediate ate the financial institutions and shown that it is possible to actually replace ICANN without working the decentralized network, and then there is now many other decentralized applications which I imagine are trying to intermediate ate other kinds of centralized figures that we thought for a long time we thought we could not get rid of. One of the interesting examples is the example of Lazarus, a peer‑to‑peer system which is using Blockchain technologies, and it's simple in the same way as Bitcoin provides tokens for people that are connecting to the network and mining. So they provide resources to Bitcoin network.
With some Bitcoins, the system of incentivization, in the Lazarus system, instead of being proof of work, it is based on the concept of proof of movement. So whenever I provide I'm actually proving that I'm moving with my car, I'm actually obtaining those Lazarus token which I can use later on in order to pay for my hides. So it is peer to peer that we don't need the figure which is in charge of coordinating the people wanting a hide and people providing the hide and then automatically they get matched up. But in addition to this, the mechanism in the sense that people are by providing in order to ensure the security of the network, because they also gain those documents. It is an enhance mechanism that brings people to contribute to the network.
The interesting thing is this is one example, but this is an example that can be generalized to many other kinds of applications. The problem today is that basically everyone is, like, the field is emergent and people are exploding still at this point and trying to develop new decentralized organization or decentralize the application. It is still really in some way we have all the stuff to try and experiment and figure out how to do it. So by analogy with the Internet, we are basically a little bit like in '94 or something like this. Before the Web actually existed when people were essentially building application, Internet application, but there was no easy way to interpret between each other, because everyone was using a different protocol. So we have FTP, we have IFC, and etc. So it's kind of similar. We are a little bit in the same model today in the Blockchain world.
One interesting project is presented itself in the same way as the ATP protocol but for the Blockchain, basically provides a really easy way for anyone to just deploy the decentralized application on the decentralized organization on top of the Blockchain, which is incentivization mechanism in the sense that the underlying idea is the concept of the token. People are providing value where value with be expressed according to what kind of community or organization we're talking about. So anyone that is contributing value to this organization use the tokens and those tokens are used to enable people to benefit from the service that is provided by the community. So this is really interesting in the sense that these are to some extent a new paradigm in the way in which organizations are managed. So as opposed to relying on the centralized entities where we have, like, this hierarchy construction and top‑down management, we can now try and adopt more flat and more open distributed networks, so kind of like the open source model, but we can generalize the open source model to any sector of activities in the sense that there is no longer anyone that needs to tell something someone else what to do, but it is just like people that are continuously contributing to an organization or to a community and according to the value that they collected to the community.
So this creates the coordination mechanism, which is based on the Blockchain, where people coordinate themselves to the Blockchain without relying on a central identity, but also people can be rewarded according to their contribution. So it's a really, really interesting paradigm shift in organization management.
Now, the really interesting thing is that the whole example in which we are use you go the Blockchain in order to mediate an organization. So this is ‑‑ people social organization that are coordinating themself by using the Blockchain as the underlying framework. The same way as today we have digital organization. Then tomorrow we can have Blockchain mediated organization.
Now, the real interesting thing, though, is that the Blockchain actually that was just the first paradigm shift. But there is a further paradigm shift, which is, for instance, when we have the so‑called digital ‑‑ contributed autonomous organizations ‑‑ distributed autonomous organizations where there no longer needs to be a human involved.
>> CONSTANZE BUERGER: So with DAO or DCOs, for example, because you can actually coordinate things automatically, you can actually enforce rules in code that are transparent to all. You actually don't really even need a human sometimes. You can actually design a corporation, for example, to follow a certain kind of business logic. And because there are also value transfers involved, you can have people ‑‑ you can have that corporation paying employees. You can have it making certain decision‑making processes based on the voting rights. You actually have the ability to create completely autonomous organizations that where its actions are fully transparent.
>> PRIMAVERA DE FILIPPI: Can you give an example of fully autonomous organization?
>> CONSTANZE BUERGER: I don't think we have one yet.
>> MODERATOR: I think about self‑driving cars. They are the owners of themselves, I mean, it's very, very crazy. It's a bit of ‑‑ is it going to be the matrix or ‑‑ don't be afraid, but we would just develop it. I mean, the self-driving. Cars are just being developed by Google. We can on the organization in this sense. If I put the self-driving car and the self-driving cars car is going to give rides when you say with the currency and it's so fun because at the certain points the self‑driving car is going to start to be autonomous self. The car can take this money and reinvest in the decentralized organization buying other cars for owners of themselves as well.
>> PRIMAVERA DE FILIPPI: Just as it's a beautiful scary future, but, in fact, to date, it's like some preliminary hearing organization and I guess the most obvious example is like a casino. We can now deploy, because the Blockchain enables people to deploy software on this distributed database, which is run autonomously. It is not run by anyone, but it's no one is controlling it. Once it's been deployed on top of the Blockchain, it operates according to those that have been encoded and no one can change those. So the awe ton me is one thing, but the second element that we're really making out with this organization is the fact that this organization is self‑sufficient. For instance, in the case of a casino, people are sending money to the applications, to this smart contract on the Blockchain, and then every time people transact with it, it's executing itself. Then it will send some money whoever has decided to win. This smart contract itself can fulfill its own people like survivor. It can charge the user for the service that it provides in order to then continue to behave on its own. So it doesn't need anyone to control it and it doesn't need anyone to actually keep feeding it with new gas in order to operate.
Obviously this creates really interesting issues as well.
>> CONSTANZE BUERGER: Usually if a completely autonomous software that's running and doing things, there is no person running it in terms of accountable and review, there really isn't anyone. There are a lot of conversations going on. Whether you actually would need a kill switch for something like that. What if you had a rogue computer program? We use this example at Berkman. What if you had a business machine whose machine was buying the highest thing with the great event rate of return, and let's say it was drugs, and would you need a kill switch to stop that machine from continuing its logic?
So we have gone from being able to oversee peer to peer networks, which is a challenge in and of itself, to be able to oversee autonomous agents on peer to peer networks.
But I think before opening it up to questions, these technologies, you hear a lot of crazy things about it, but it really represents not just a paradigm shift in the technology itself, but in the way we organize ourselves and in the way we measure values. So we have really limited ‑‑ we've had really limited roads and really limited ways of counting the way value occurs.
So this opens up many, many roads of value transfer of communications of coordination and doing this on a secure peer to peer basis. But it allows us then to be creative and to invent new ways of measuring what money is or what we want to ‑‑ what we actually value in society and how we can coordinate around that. Again, the more and more people are able to coordinate themselves, the more ordinary people are able to do things on their own, the more disruptive it is to whole host of regulatory and legal regimes that assume that there's somebody up there that can kind of oversee everything.
>> PRIMAVERA DE FILIPPI: So I guess the bottom line is that similar to how the Internet was beyond it would create an amazing potential for freedom of expression, and at the same time there was this vision of the Internet as being this base of criminality and anarchy, because the state no longer could put its own on top of the cyberspace. People have slowly understood that indeed there is still this potential for emancipation, but then the Internet also becomes a powerful tool of control. So the Blockchain has a really interesting similar dynamics in the sense that it actually goes even one step further in the potential for freedom, emancipation, and intermediation and etc. Statement it is really powerful technology, because it provides all the transparency on the one hand, but also the self‑executing smart contracts. So to some extent it's going to reflect much more than the Bitcoin that the Internet was providing. The question is quite the same. How can we actually benefit from all the potential that this technology are providing to the citizen, but how do we make sure that it also lives within a fair regulatory framework. That is on the one hand protected of civil liberties, but at the same time that doesn't get corrupted by the established powers in order to actually use it against the citizens.
So I guess we can now open to the questions.
>> AUDIENCE: My name is Fernando. I'm responsible for F123 project. We provide accessibility to the blind. Just a suggestion, I think the technology is scary enough. You don't need to use casino as an example.
You might want to use microcredits. We could create an autonomous entity that specializes in gathering savings and making loans, something like that. That would be amazing, because interest rates are a way of sustaining banks. But if you have a bank that is autonomous, and self‑sustaining, inherently self‑sustaining, you could have an interest‑free loan. That's really amazing.
So who should I talk to to create this?
>> CONSTANZE BUERGER: There are a ton of things sponsoring Blockchain. So I think there are a lot of people that you could talk to who would be interested in piloting a project.
>> MODERATOR: Peer to peer lending is already a hot topic on the Bitcoin ecosystems. There are three or four reasonably big startups working on this. I guess it's just like Constance said, it's a matter of time for us to see much more wider, much more disruptive initiatives in this area.
>> AUDIENCE: I'll start with the request that actually we need a number of sessions at the next IGF focused on this topic. One is not enough is my suggestion. To echo the last point, I'm involved in activities in London which are looking right at the full spectrum of sectors with governments and uses. The point I would make is that we're seeing a split between what I would call the trusted communities and we openly talk of trusted Bitcoin versus untrusted Bitcoin, and what's the character and nature of those. What are the capabilities that need to be wrapped around with Blockchain on the one hand and cryptocurrency on the other when you want to work in a trusted environment versus an untrusted environment? I just wondered if you could say something about capabilities that other things that you need to have, like enrollment functions and so on for entities in order to meet things like LEI compliance in banking. We've got other requirements in eHealth and so on.
>> CONSTANZE BUERGER: A couple of questions, a couple of answers. One is on one hand you want to make sure that operators are responsible, that they have good processes that they're safeguarding money that, that they are IT systems are ‑‑ they have cybersecurity programs, that sort of thing. So that inherently means you need somebody then checking the box and looking at them and having an auditor come in, having some licensing authority go through that. That's inherently at odds with a P to P technology, where anyone can do anything.
So right now I think given that this is money, these are people's funds and you are talking about financial networks, you do need some level of oversight.
Now, if you put on a whole ‑‑ if you put on the whole analog world of oversight to these companies, and you won't see them grow. Another issue that hasn't been raised is that these P to P technologies assume that consumers can take their of their keys, for example. What happens when you lose a key? You lose access to your funds. What happens if your key is stolen? Then you'll lose your fund. So on one hand you need, I think, a higher level of education, not only on the operator side, to be able to understand where the risks are. On the other, I think you need governments involved that understands how the technology works and what the implication of the rule is. For example, if you require every you will destroy financial privacy, you will be relying on small startups to safeguard personal financial information which, once tied to a transparent network, completely destroys financial privacy.
So it's not ‑‑ you simply cannot take the old regulatory environment and say do this. That won't work.
So it's going to take time. It will take having some consumer protection guidelines in place. That's something that we as a group have been working on. I highly encourage you to come to our workshop on Friday at three o'clock where we'll have an hour ‑‑ full hour to discuss these issues and we can talk a little bit about what governments and policymakers and universities and people in the ecosystem have been doing to solve those questions.
>> PRIMAVERA DE FILIPPI: I will answer there is interesting misconception, I guess, by the fact that Blockchain is trustless technology, which means that you don't need to trust anyone. But it also means that you are eliminating the concept of trust, and it is true that at the technical level, when I make a transaction to you, I don't need to trust you. When I make a contact with you, I don't need to trust you abiding to the contract, because the technology will not ‑‑ on the other hand, for most of daily activities, we actually want trust. So the Blockchain technology is creating these trustless underlined framework, but now, because we eliminated the intermediary, not just the person that accessed the individuals, but also the person that provides some kind of policy of like police go the network, to make sure that everything is okay, that people are not bad people, you know, because if I interact, for instance, on Airbnb, I want to make sure the payment will go through, but I'm going into a house that's a good house, etc. So because we are eliminating intermediary, we need to on top of this trustless technology a new trust layer, a new system which has to be distributed system of trust, because we cannot rely on the central intermediary. Also, not at the government's level. We need to identify how we can design the government and enable a new layer of trust on top of a trustless system. The more trustless is the system, the more you need to display of trust for every interaction that actually people want to rely on some level of trust. We don't have an answer yet, but we're working on it.
>> AUDIENCE: Other people may want to ask questions, but the supply chain requirements for trust models are very well established indeed, which is why people are looking at applying those experiences over the top of these kinds of technologies. I look forward to the workshop.
>> Mark from Microsoft. I think I heard that there is a copy of the bit chain database on every user's machine; right?
>> MODERATOR: Not all users, but the ones who choose to work as a miner, to contribute enter.
>> AUDIENCE: So just the miner?
>> MODERATOR: You need five or six copies. Not just the miners, but the users who want to contribute what we call a full note. There are two ways to do that. You can save all the database on your computer or you can trust on the server to record this for you. But these are separate things, you know. You can check the work of the miners to see and have this database on your own computer, but the miners are the ones responsible to validate the transactions.
>> AUDIENCE: How big is it and how fast is it growing.
>> MODERATOR: It's growing a lot.
>> PRIMAVERA DE FILIPPI: I think it's over 20 gigabytes.
>> MODERATOR: 40. I'm running a full load at home. I don't actually know how big it is, because it's getting bigger.
>> PRIMAVERA DE FILIPPI: It's one big problem. At the moment the Blockchain, everything is experimental. Moment the real practical application is Bitcoin because the Blockchain still has this big problem, which is scalability and this problem has not yet been resulted. There is a lot of results going on. Many people are working on it. This is like.
>> CONSTANZE BUERGER: In a year or year and a half you'll see alternate consensus. We have two questions over there.
>> AUDIENCE: My name is Diego. And I work for BRS as an advisor. And I have two questions. One is related ‑‑
>> It's not about replacing ICANN.
>> AUDIENCE: At least we have voice.
>> I think they don't like the idea of replacing ICANN.
>> Or maybe we are just too early for the transition.
>> It's not like providing an alternative mechanism, which can pretty much fulfill the similar function. In terms of domain name registration and transfer, ICANN also deals with, like, cybersquatting and this will, of course, will have to be on top of name coin. The name coin itself is decentralized database, so that to make sure that no two persons can have the same domain name at any given time.
I would like to set this straight: Companies, individual users, grassroots, they all are part of the policies related to the name system, even in the IGF. It's not exactly ICANN; it's the naming system
How can we benefit with this technology? You guys have been saying this is a power technology that enables a lot of shift. But one of the shifts that I've never seen anyone talk about while dealing with Bitcoin is the huge (?) that mark the financial system. If you could just suggest readings or something like that, how Bitcoin can be used to revert a symmetry between the developing world, that would be great, because it doesn't seem clear at this point how concentrated the Bitcoin is when you compare to developing roll
>> CONSTANZE BUERGER: The inefficiency ‑‑ what is it the distribution of wit coin is incredibly concentrated. There is a lot of criticism of that. The Bitcoin is the first. So there are others. There are other alternate currencies. The disparity is one of the greatest promises in these kind of technologies. If you read consumer's union in 2012, you'll see how the monopolization of financial have created disparity. The poorest companies in Africa, the remittance payments are 50% of their GDP, and we are charging 25% of every dollar they sent home. It's reduce you go the amount of the abilities to the global aid we sent to Africa is being charged back in remittance. All this worry that all the aid that we're sending to Africa, for example, whether it's reaching corrupt governments or constituency, we're charging 70% of that value back from Western Union and other charges. So if we can take that away, you think you would see really, really big changes.
Also, in order to be able to send any money around, you do have to use these rails. So imagine people in Developing Countries without access to bank accounts, being able to access capital and send money without these incredibly charges. That's a huge gain there.
>> MODERATOR: Being very honest to you, Bitcoin was not created to offer solutions to these problems, but if we create applications on top of it, we can start grasping solutions. I don't have the time to explain everything to you, but try to read about the projects being built on top of the Blockchain called Swar. It's just like for collaborations, mind set for some part. I have to be honest of the Bitcoin community.
>> AUDIENCE: I'd like to hear from you about the reputation systems to continue the Blockchain. I think also feature ‑‑ I would like to hear especially from you.
>> I guess I have to answer that. What do you mean system?
>> AUDIENCE: Using measuring reputation according to your payments, have paid eventually credits for DAOs, if they work microcredit ‑‑ a bank DAO that loans money. I think the reputation of creating a reputation system that attributes to wallets or people or tokens a certain reputation level that is used globally.
>>PRIMAVERA DE FILIPPI: You actually have two types of system. One will be the personal reputation system, which is based on subjective vision of who do you trust and who do you not trust and so far in the case of Airbnb or all the things that are subjected to the person that wants to find out whether or not to interact with another person. So personal reputation system actually is they emerge from the fact that if you can recall a lot of information, like every transaction is recalled and then you can add metadata on top of this transaction. And then every different people which have different value system, they can look at this database and they can infer information about how much to apply to every single person. So the nice thing that the Blockchain provides, today, for instance, you can have only one reputation system per platform. It's the one platform that deploy its own system like eBay has its personal reputation system. You can only use one subjective system, which is actually the one of the platforms. The platform is imposing its own value system in order that everyone is abiding to the same reputation system. So that's one really interesting thing that the Blockchain provides, because many a centralized database, anyone can apply its own value on top and create its own reputation system, which can be either its own person or it can be the one of community, etc. That's one part.
The other thing which I think is even more interesting is the objective of public reputation system, which is when you actually want to generate value. For instance, the back seat protocol is exactly about this. If I contribute to a community, I am ‑‑ I become ‑‑ if my contribution is actually valued by the value system of the community, there needs to be a method and there needs to be a decentralized consensus method in order to decide how much is the value of my contribution and therefore how much I will be in terms of tokens, but in addition to this, as I contribute to this community, I will actually become a member of the community and I acquire some kind of weight. So in this way, like the objective of public reputation system is more ‑‑ by contributing to the community, I acquire a little bit of financial influence that would enable me to evaluate the contribution of others. We can discuss later a lot. I can send you information, but backfill is actually the faster protocol that actually designed an objective system which can be on a decentralized system. This is actually quite difficult. It can easily be cheated and you do not have the central authority the people that are pretending to be something or the online identities that are abusing the system. It's a really challenging task. It's still a work in progress. But I think backfill at the moment is the most advanced example of objective reputation system.
>> If we succeed, we'll just have a whole new world of being able to interact. Right now, we have such narrow measures of values; GDP is the value creation of a country. And it's literally manufactured numbers that are changed over the next ten years. They're inaccurate. Imagine having actually being able to track real values, being able to track appreciation, being able to move beyond GDP as a measure of value creation or move beyond a credit report to say who you are. Your community knows who you are. If you're able to securely and tokenize that, create a real transparent way of being able to show that to the rest of the world and make that reputation fungible with real world financial networks or banks. You open up a much more holistic and accurate picture of who you are and will enable many, many more people to participate in our economies.
>> AUDIENCE: With all this talking that you just had, you solve the problem of the value of views, like the currency. If your currencies have value of use, as you suggested, but how about the reserve of value of life? One of the functions of money is reserve value. We see this with the U.S. dollar and other strong currencies. Then this is the issue the reason I'm skeptical about Bitcoin, because the lack of coverage on the Bitcoin may let investors and average away from it, because its value can be very volatile, and you have nothing to compare the value to the Bitcoin. So it makes Bitcoin really volatile and no value, like gold, U.S. dollar. So can you clarify my doubts and my skepticism?
>>PRIMAVERA DE FILIPPI: It is volatile, that's for sure. One thing, perhaps, is because it's actually really new and just small change in demand, we change the price. You can imagine if Bitcoin was adopted in a much more mainstream way, it would be much harder to change the value. On the other hand, you can actually design ‑‑ you can design system of partial pack and be sure there is only a particular range in which the top coin can go. A community can decide, for instance, I never want this currency to have a market higher than X. Whenever the market price gets higher, it means the community will actually sell that token for that price. So automatically people will no longer purchase the token in the market. They will purchase it directly to the community. The community will issue a new amount of token. The market price will drop. So the problem with Bitcoin is it has been algorithm encoded. But if you actually create a currency that has a variable amount of prices, then actually control the market value of a currency by deciding how much to issue.
>> And I think getting down to more fundamental; it's the social wrapping and the legal wrapping around currency that makes it currency. So gold actually has no intrinsic value. It's a rock. It's a natural resource. But it has certain properties that have made it valuable for us to use as money because it's fungible, it's scarce, it's easy to carry around. These are the qualities that we took in order to choose this as something that's valuable. Same thing with money. Money is actually no gold standard. They're pieces of paper. And the cup of coffee that you buy today is actually worth a little bit more or less than that same cup of coffee you bought yesterday because of the volatility. We have now, obviously, people who ‑‑ governments with policies that deal with the volatility. None of these things inherently make this money. So we can actually ‑‑ the exciting thing about these protocols is that you can actually embed different monetary policies and social policies into the money. So you can actually ‑‑ Bitcoin was in response to the financial crisis. It was designed to be scares. It was designed ‑‑ you can design in parallel another currency that had a negative interest rate. So you could actually use two different kinds of currencies and have two different kinds of policies. So you have different ‑‑ right now there are a lot of experiments going on and protocols. The volatility, the inequality of Bitcoin, that's a huge issue hopefully we'll see.
>>PRIMAVERA DE FILIPPI: Bitcoin is exactly to some extent a bat example, because it's stigmatizing. It's so much things happening around Bitcoin, but many people are actually just not even paying attention, because it's stigmatized.
>> AUDIENCE: Thank you.
>> MODERATOR: Have a look at the project, called Maker, just maker D‑O, ifyoudon'tknow.com, like stable.
>> AUDIENCE: My name is Rafael ‑‑
>> MODERATOR: You go to the next one.
>> AUDIENCE: It's me or you. Sorry. My name is Viviani. I'm from Europe ‑‑ for it to be true with you, it's the first time that I had heard of Bitcoin and Blockchain, and I'm really to say in the middle of this workshop I researched a little here to understand better what are you talking about. And I have two questions for you. The first one is how the Blockchain can teach transparency, quality, system for our echo monetary system that is nonpublic and centralized. And I want to know in European what is the ‑‑ for me it looks like a cloud, something like that. So it's a little bit confusing because we have this Blockchain and we have these codes and this is like in my mind and little bit confusing. I would like you to explain and put your opinion about it first one and second one, please.
>> Right now transparency is hugely transparent. If you can imagine, let's say the Bitcoin network is a network of banks. Imagine all of the money that they're passing through and the investments, imagine all of that being online for anyone to see. So instead of having these small black boxes of information, we're trusting the bank to report out that those ledgers and accounts are accurate. You can actually see it and actually verify it yourself. So it’s actually hugely transparent. The other side of that is there are reasons why you need to have privacy. So actually, the privacy issues are much more pressing than the transparency issues. The transparency is evident in the technology.
>>PRIMAVERA DE FILIPPI: I can try and explain.
>> MODERATOR: I'm going to try to explain because in English it is so hard.
>> AUDIENCE: My name is Rafael. I'm from PUC Rio University. And I work with digital TV broadcasting. And I read about an experiment they did broadcasting the Blockchain through the air and over normal broadcast channel. And I think that really Blockchain is database model that fits very well for broadcasting. And we all know that really broadcasting, the importance of it is getting a little lower because of Internet, especially. So I think, for example, in Brazil we have the standard the configuration of the transmitter about 20 megabits of bandwidth. For example, if one broadcaster located 10 or 15 megabits to broadcast the Blockchain, it may solve some problems of distribution of the Blockchain. If ten kill owe mat transmitter can broadcast to ten million people, if there is one people receiving the signal or a million people receiving the signal, doesn't matter. And it's also you cannot really ‑‑ if anyone is trying to check who is using Bitcoin, if you take a look at the network and you see the block chains going around, maybe you can track the people, but using broadcast, you don't have away. You receive it in a way. I want to hear what do you think about using broadcasting to send the Blockchain to the people.
>> MODERATOR: Such a hard question. There are many different things I can say about what you just asked. For example, I do agree with you that Blockchain ‑‑ the Blockchain is actually a way of broadcasting information, but you have to keep in mind that this is a distributed network which is the main feature is generating consensus. So to generate or to maintain this consensus, there is this time you have to wait for the network to validate the information so that we can say, okay, which is true, so we can broadcast the truth of all the data to all the other notes of the network. In the Bitcoin network, this time is of ‑‑ is generally speaking ten minutes. If you go for the Blockchain in general, 15 seconds. It can vary a lot from Blockchain to Blockchain. Of course, it's a grade off. Why we don't have new blocks on Bitcoin, it's seconds, because it's a matter of the digital security.
By using ‑‑ by comparing those two technologies, you have to keep in mind this aspect, because for generating consensus, we have to wait a little bit to have the validation to broadcast the information. All the architecture of the Blockchain was to generate consensus. So it makes sense for you to use Blockchain technology to broadcast information. That depends on consensus. Just keep in mind this kind of things.
Regarding the use of other kinds of broadcasting technologies to spread block chains to refresh the block chains, it's amazing. You just came with the most interesting case so far, you know. This case of ‑‑ don't know which group or which person use I the machine to broadcast Bitcoin, and Blockchain technology in general does not depend on the Internet anymore. It's just a matter of access to the network. There is even I just finish my point, even a Bitcoin developer who is planning to launch satellites around the earth. So Bitcoins and Blockchain technology which have access to the satellites, it's going to be even more unstoppable.
>> AUDIENCE: Hello. I'm Fabian owe from the centre of technology society. I don't know much about Bitcoins, but I have a simple question. Is it possible on credit system based on Bitcoin or no?
>> MODERATOR: I have to think about it. Is it possible to offer credits for Bitcoin Blockchain?
>>PRIMAVERA DE FILIPPI: You mean like loans and stuff? Credit loans?
>> Like capital credit?
>> MODERATOR: I mean, just like I said to him in his question, the technology ‑‑ I mean Bitcoin was not created to offer credit, because it's cash. It's just like if you ask me can I use cash, Brazilian notes to offer credit? I mean the technology of the bills? No. It's digital system and no bank to offer credit. Sorry for my very rough comparison, but you can and someone here, peer to peer is a hot topic on the Bitcoin ecosystem.
>>PRIMAVERA DE FILIPPI: With smart contract you can actually see the system so you know for sure like I can loan a particle amount of money and then whatever mechanism you can design into the smart contract, I know for sure that if a condition happens, then a transaction will happen. You cannot cheat on my credit.
>> And you could also use smart contracts to hedge the volatility of Bitcoin. Obviously offering credit gives you exposed to the volatility. You have smart contracts that then basically hedge the volatility.
>> AUDIENCE: She was talking about Bitcoin was made not to be a reflection. Based on credit, is it possible that Bitcoin ‑‑ I'm sorry. She was talking about relations before. Is it one more reason to create the trust layer you're talking about because credit involved more personal environment ‑‑ I understand like that? So out of the logical layer is it one more reason to keep on with people working when you use credit associated with Bitcoin? And is it ‑‑ Bitcoin working in the system of credit and not provoke inflation.
>> MODERATOR: Inflation on the Bitcoin network is totally controlled by code. You have the specific amount of Bitcoin, which are generated each ten minutes.
>> AUDIENCE: Even if you use another system of credit.
>>PRIMAVERA DE FILIPPI: So you cannot ‑‑ as banks do today, which is they change a number that would give credit on the expectation that the system will not come down because not everyone will come back to get the money, you cannot do that on the Blockchain because you cannot ‑‑ there is no one ‑‑ no bank or central authority that can create new money. So you can loan your money, because you have the money. You can make a loan, and then expect that money. But you cannot generate out of nothing a new bunch of Bitcoins that you can offer to someone.
>> MODERATOR: There are no bones on the Bitcoin.
>> AUDIENCE: My name is victor. I'm a researcher. I would like to ask about the ecological Bitcoin. Like do you think that Bitcoin's ecological sustainable? Because I saw a study that has shown that one single transaction of Bitcoin spends, like, the energy to sustain one house and a half for a day. So for each transaction you spend that, I think for a whole economy of Bitcoins, is it sustainable? I'd like to think what your opinion about that.
>> So currently the short answer is no. That's why scalability -- when they talk about scalability, the energy consumption is one part of that. So last year the Bitcoin network used up more energy than the country of Ireland. That's given the market cap right now, a very small number of transactions than all the transactions in the world. If we want Bitcoin or currencies like these to play anywhere near close to a role as a lot of state‑sponsored currencies, then the emergency consumption would be crazy, that's because protocol is based on something called proof of work, that requires intensive computation. There are other experiments going on right now in moving to proof of stake and building out different incentives for protocols to be able to achieve consensus on the state of that ledger without having to constantly consume energy to do these computations.
>>PRIMAVERA DE FILIPPI: Last question. No questions?
>> You can come to our longer workshop on Friday and feel free to bombard us with questions there.
>> MODERATOR: And I should be available to ask some questions and give some Bitcoins if you want to learn more about the system.
>> I was very impressed with this cloud.
>>PRIMAVERA DE FILIPPI: Thank you for coming.
>> MODERATOR: Thank you so much.